Case Summary and Outcome

The United States Court of Appeal for the Ninth Circuit upheld the district court’s dismissal of Prager University’s (“PragerU”) federal causes of action against YouTube and its parent company, Google, LLC, for allegedly censoring their video content uploaded to the site. PragerU, a nonprofit educational and media organization, claimed that, by classifying some of their videos as “Restricted Content”, YouTube was attempting to  silence “conservative viewpoints and perspectives on public issues.” [p. 5] As such, PragerU alleged that there had been a violation of the First Amendment and false advertising under the Lanham Act, 15 U.S.C. § 1125(a)(1)(B), as well as several state law claims. The District Court for the Northern District of California denied PragerU’s motion for preliminary injunction to compel YouTube to declassify the restricted videos. PragerU subsequently filed to amend the two federal claims. The Court of Appeal held that, despite YouTube’s popularity among the public, it is a private forum not subject to the First Amendment. Regarding the second claim, false advertising under the Lanham Act, the Court held that YouTube’s statements concerning their content moderation policies do not amount to “commercial advertising or promotion”, as required by the Act. Furthermore, YouTube’s allocation of some of PragerU’s videos under Restricted Mode did not amount to an advertisement, promotion or misrepresentation of the videos. Finally, the Court reasoned that YouTube’s “braggadocio” regarding their commitment to free speech was an opinion not subject to the Lanham Act.

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Facts

PragerU alleged that, as of October 23, 2017, YouTube exercised discriminatory censorship by restricting at least 21 of their videos on the site. PragerU is a nonprofit educational and media organization based in Los Angeles, California. The “University” does not offer certificates or degrees. Rather, as part of their mission to “provide conservative viewpoints and perspectives on public issues,” [p. 6] the organisation uploads hundreds of videos to YouTube, addressing a wide range of political issues. These videos espouse viewpoints and perspectives based on their conservative values. 

YouTube is a “profit limited liability corporation” that is “wholly owned by” Google which is a “profit, public corporation.” YouTube is the largest platform for user-generated videos and content, with around 400 hours of video content uploaded each hour. The mission statement of YouTube on their official blog is to “give people a voice” in a place to express themselves in a “community where everyone’s voice can be heard”. [p. 6] Subject to the Terms of Service and Community Guidelines that are accepted by users before posting content, YouTube reserves the right to remove or restrict certain content. 

PragerU alleged that, despite the neutrality in their policies, YouTube was discriminatory by censoring several dozen of their videos through age restrictions and their “Restricted Mode” setting. Certain content may become unavailable in Restricted Mode should they include potentially mature content, including videos about “[d]rugs and alcohol,” “[s]exual situations,” “[v]iolence”, and other “[m]ature subjects”. PragerU also alleged that YouTube “demonetized” some of their videos, preventing third parties from advertising. While some of these classifications were successfully appealed through YouTube’s internal process, some of the videos remain restricted or demonetized. PragerU alleged that this is due to YouTube’s opposition to conservative political views.  Further, PragerU alleged that the Defendants provide “a limited appeal process for any users who believe that the application of age restriction filtering to the user’s video contents is unwarranted as the users may appeal on the age restriction on any particular video only once”. [Prager Univ. v. Google LLC, Case No. 17-CV-06064-LHK, 3/26/2018, p. 2]

Pursuant to the same, on October 23, 2017, Plaintiff filed an instant suit against the defendants in which the Plaintiff asserted seven cause of action i.e. 

1. Violation of Article 1, section 2 of the California constitution.
2. Violation of the First Amendment of the United States Constitution;
3. Violation of the California Unruh Civil Rights Act;
4. Violation of California’s Unfair Competition Law;
5. Breach of the good faith and fair dealing;
6. Violation of the Lanham Act;
7. Claim for declaratory relief based on Defendants’ alleged violations of the First Amendment of the US Constitution.

On December 29, 2017, the PragerU filed a motion for a preliminary injunction to compel YouTube to declassify the restricted videos; the defendants also filed a motion to dismiss PragerU’s complaint. On March 26, 2018, the United States District Court for the Northern District of California denied PragerU’s motion for a preliminary injunction. The Court also granted YouTube’s motion to dismiss, with leave to amend the two federal claims. Rather than filing to amend the complaint, PragerU appealed the two claims under the First Amendment and the Lantham Act.

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Decision Overview

Circuit Judge Mary Margaret McKeown delivered the U.S. Ninth Court of Appeals’ majority opinion. 

The issue in this case was whether the district court erred in ruling that YouTube is a private forum, not subject to judicial scrutiny under the First Amendment, and that YouTube’s statements concerning their content moderation policies did not constitute “commercial advertising or promotion,” as required by the Lanham Act.  

1. The First Amendment Claim 

In consideration of PragerU’s First Amendment claim, the Court held that, “despite YouTube’s ubiquity and its role as a public-facing platform” [p. 2], it is a private entity, not subject to the First Amendment. 

The Court first recalled that the First Amendment prohibits the government, not a private entity, from abridging speech (Hudgens v. NLRB, 424 U.S. 507, 513 (1976): “the constitutional guarantee of free speech is a guarantee only against abridgment by government, federal or state”). That YouTube is a private entity, operating the platform without involvement by the state, was not contested by PragerU. 

The panel then clarified that this principle remains central in the “digital age”. The Court referenced the long-standing precedent in Howard v. Am. Online Inc., a case concerning America Online (“AOL”), which recognised that “a private etity hosting speech on the Internet is not a state actor”. [p. 9] This principle was most recently evoked in the Supreme Court decision Manhattan Cmty. Access Corp. v. Halleck, 139 S.Ct. (2019), affirming that “merely hosting speech by others is not a traditional, exclusive public function and does not alone transform private entities into state actors subject to First Amendment constraints.” [p. 9] The Court also noted that private property does not “lose its private character merely because the public is generally invited to use it for designated purposes.” (Lloyd Corp. v. Tanner, 407 U.S. 551, 569 (1972)) As such, despite YouTube’s ubiquity as a “paradigmatic public square” in the digital sphere, the organisation does not amount to a state actor. 

The Court then considered the argument put forward by PragerU: that YouTube is a state actor on the grounds that it performs a public function. While acknowledging that a private entity may be transformed into a state actor when conducting a public function, the Court clarified that the relevant function “must be both traditionally and exclusively governmental” (Lee v. Katz, 276 F.3d 550, 555 (9th Cir. 2002)). To meet this standard, the function must be “traditionally the exclusive prerogative of the state” (Rendell-Baker v. Kohn, 457 U.S. 830, 842 (1982)). The Court determined that the function of hosting speech on a private platform could not be considered “an activity that only governmental entities have traditionally performed” (Halleck, 139 S.Ct. at 1930). 

The Court subsequently rejected PragerU’s argument that the popularity of YouTube renders the organisation subject to the First Amendment on the basis of the ruling in Marsh v. Alabama, 326 U.S. 501, 505–09 (1946). This case held that “[t]he more an owner, for his advantage, opens up his property for use by the public in general, the more do his rights become circumscribed by the … constitutional rights of those who use it” (326 U.S. at 506). This decision was, however, limited in subsequent decisions to the context of “company town[s]” and other circumstances in which the private entity “perform[s] the full spectrum of municipal powers” (Lloyd Corp. v. Tanner, 407 U.S. 569 (1972)). In the case before the Court, “YouTube does not fit the bill.” [p. 12] The Court also rejected the argument by PragerU that a private entity can be transformed into a public forum if its property is open for public speech, as it found “no support in our precedent.” [p. 13] Rather, in order to create a public forum, it is the government that must intentionally open a property for public discourse (Cornelius v. NAACP Legal Def. & Educ. Fund, Inc., 473 U.S. 788, 802 (1985)). As YouTube is not in any way under government control, PragerU’s public forum theory was not met. Finally, the Court dismissed PragerU’s argument that YouTube became a public forum when it declared itself to be so. Any statement by YouTube to declare a public commitment to free speech, or a “neutral public fora”, did not convert the organisation into a public forum.

Both parties in this case put forward wider public policy considerations for the Court. PragerU argued that the “tyranny of big-tech” had the power to threaten the freedom of expression by censoring any speech it disagreed with. Along with various amicus curiae, YouTube proposed that online speech must be regulated in order to prevent the “undoing of the Internet”. In coming to their determinations, however, the Court declined to consider either argument. Rather, their decision was derived from the fact that the “state action doctrine precludes constitutional scrutiny of YouTube’s content moderation pursuant to its Terms of Service and Community Guidelines.” [p. 14] As such, the Court affirmed the district court’s dismissal of PragerU’s claim under the First Amendment. 

1. The Lanham Act False Advertising Claim 

The Court proceeded to affirm the district court’s dismissal of PragerU’s second federal claim against YouTube of false advertising under the Lanham Act. J. McKeown first set out that, for a claim under 15 U.S.C. § 1125(a)(1)(B), there must be a “false or misleading representation of fact” “in commercial advertising or promotion” that “misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities.” (Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1139 & n.2 (9th Cir. 1997)) The Court held that statements made by YouTube with regard to their content moderation policies did not amount to “commercial advertising or promotion,” per the Lanham Act. Such statements were “made to explain a user tool, not for a promotional purpose.” [p. 14] In consideration of Fashion Boutique of Short Hills, the Court recognised that the Lanham Act cannot encompass all commercial speech; as such, “not all commercial speech is promotional.” [p. 15] 

The Court did not consider representations made by YouTube in relation to their Restricted Mode, such as those in their terms of service, contracts and community guidelines, to be advertisements or a promotional campaign. Nor did the Court interpret the categorisation of some of PragerU’s videos under Restricted Mode to “imply any specific representation”. While false advertising claims may be founded upon implied statements, such statements must be specific and communicated with the intent to “deceive a significant portion of the recipients” (William H. Morris Co. v. Grp. W, Inc., 66 F.3d 255, 258 (9th Cir. 1995)). The only statement concerning the Restricted Mode designation on YouTube’s platform is that the video is “unavailable with Restricted Mode enabled.” [p. 15] Such a notification was not interpreted to have a “tendency to mislead, confuse or deceive’ the public about the nature of PragerU’s videos (Am. Home Prods. Corp. v. Johnson & Johnson, 577 F.2d 160, 165 (2d Cir. 1978)).

Finally, YouTube’s “braggadocio” regarding their commitment to the right to freedom of expression was determined to constitute an opinion, not subject to the Lanham Act. The “vague” and “lofty” statements cited by the court included: “everyone deserves to have a voice, and that the world is a better place when we listen, share and build community through our stories” and that “people should be able to speak freely, share opinions, foster open dialogue, and that creative freedom leads to new voices, formats and possibilities.” [p. 16] These assertions were held to be “classic, non-actionable opinions or puffery.” [p. 16] 

Based on the foregoing factors, the Court of Appeal held that the district court correctly dismissed both the First Amendment claim and the Lanham Act claim.

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